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Finterview: Sharing Alpha

Finterview: Sharing Alpha


The following interview with Oren Kaplan Co-Founder SharingAlpha and Managing Partner Meitav-Dash Global Markets I conducted last year. Sharing Alpha is just one example of a booming startup scene in Israel.


Please describe your company and product

SharingAlpha is a user generated fund ratings and model portfolios platform. SharingAlpha rates funds based on the average rating provided by fund selectors worldwide. Apart from being able to create a better fund rating, SharingAlpha is also able to rank the individual raters in terms of their talent in selecting funds. Their fund selection track record enables the raters to test their analysis, and if they choose the raters are able to present their proven track record to existing and potential clients.

Based on the above, SharingAlpha is able to publish a list of both top rated funds and top ranked fund selectors.An additional feature enables investment advisors to build virtual fund of funds and in turn SharingAlpha ranks them based on their performance not only as fund selectors but also as asset allocators.

The use of the website is totally free and covers over 100,000 funds listed in 110 different countries.

 

Why did you start your business?

Using conventional and quite popular mutual fund rating tools might help you justify your choice (in case you are managing other people’s money) but it isn’t a winning strategy to say the least.

In a recent study by Morningstar it has confirmed that using only quantitative tools, that are based on past performance, isn’t the right strategy.

The same study showed that ratings that were based on qualitative analysis worked 70% of the time. However doing qualitative analysis demands more man power to complete.

There are plenty of traditional Fund rating firms: Morningstar, Lipper, Citywire (ranks managers) and many more. They all base their ranking mainly on past performance. Since they employ a relatively small number of analysts they find it impossible to review, on a continuous basis, critical factors such as the incentives and motivation of the management team, capacity and limitation on size, active share, etc.

In recent years the idea of using crowd sourcing in order to improve service and product ratings has become main stream. Companies like TripAdvisor, Yelp, IMDB and Zagat have become extremely popular.

It has been proven time and again that using the „wisdom of the crowds“ works.

My favorite example is the results collected from the game show ‚Who wants to be a millionaire?‘. During the game participants are offered to ask a friend (who they consider to be an expert) or ask the crowd of audience in the studio. The data shows that asking the expert results in 65% success rates while the crowd is right 91% of the time.

More recently this idea has entered the financial world with companies like eToro, Motley Fool, Estimize, Vetr.

It is also worth mentioning two pioneers in this field, Marshall Wace and what is now called TIM group.

What all these FinTech startups have in common is the idea of using crowds and their knowledge in order to offer improved financial ratings and market predictions.

So, on the one hand we have a problem with how funds are currently rated and, on the other hand, we know that wisdom of the many is advantageous in any selection process it has been applied to.

This is where SharingAlpha comes in.

 

What customer problem will you solve? Your main USP?

Our vision is to offer the investment community a better way to select winning funds and at the same time to offer Fund Selectors and Investment Advisors the option of building their own proven long term track record. It’s about time that funds are rated on the basis of parameters that have been proven to work and Fund Selectors and Investment Advisors will be judged according to their ability to add value to investors.

Our vision is to offer the investment community a better way to select winning funds and at the same time to offer Fund Selectors and Investment Advisors the option of building their own proven long term track record. It’s about time that funds are rated on the basis of parameters that have been proven to work and Fund Selectors and Investment Advisors will be judged according to their ability to add value to investors.

 

How is your startup financed? In what funding phase are you?Currently, it’s

Currently, it’s self financed, however, we are open to external funding from strategic investors. We have recently partnered with 2 media companies that offer us marketing support.

 

Please describe your business model!( You can use a canvas picture)

This is actually the only thing we are not changing in the industry. We will charge a licensing fee from fund providers that will want to present their funds rating on their marketing material.

 

Please tell us some facts about your team? Who are the founders and what are their skills?

SharingAlpha is an Israeli based FinTech company founded by two brothers. Oren Kaplan has over 20 years of experience in the Financial Industry and he covers the ‘Fin’ part. Yuval Kaplan, now aged 46, has been writing code since the age of 13 and complements the ‘Tech’ part.

 

Short answer: Disrupting banks or enabling banks?

We are offering an alternative approach to fund selection and asset allocation while simultaneously offering investors a quantifiable way to evaluate investment advisors.

 

In what are you better than banks?

We use a completely different approach.

Our idea is to improve mutual fund ratings by leveraging on the knowledge and experience of thousands of investment advisors and fund selectors worldwide.

SharingAlpha enables the investment community the possibility of sharing with each other their knowledge on fund managers that have a better chance at creating alpha.

 

What are the biggest future challenges for banks and for your company?

Reaching thousands of potential community members globally.

 

Are you satisfied with the progress of your startup? Are you on target?

We are way beyond our initial target. SharingAlpha has become the world’s largest fund rating agency in terms of the number of Fund Analysts contributing to its ratings.

 

Any tips for people who likes to start a finTech startup?

Share you startup with others and you will be surprised how many people will offer their support (assuming they like your idea).

 

What are your plans and milestones for 2017?

Doubling the number of our community members.

 

Mein Gesprächspartner Oren Kaplan

Finterview: Sharing Alpha

 

Boris Janek

AUTHOR - Boris Janek

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